An Experimental Study of the Effects of Inequality and Relative Deprivation on Trusting Behavior

Abstract

Several non-experimental studies report that income inequality and other forms of population-based heterogeneity reduce levels of trust in society. However, recent work by Glaeser et al. (2000) calls into question the reliability of widely used survey-based measures of trust. Specifically, survey responses regarding trust attitudes did not reflect subjects' actual behavior in a trust game. In this paper, we conduct a novel experimental test of the effects of inequality on trust and trustworthiness. Our experimental design induces inequality by varying the show-up fees paid to subjects, in contrast to previous experiments that focus on broad cultural or national differences in trust. We do not find robust support for the hypothesis that inequality per se dampens trusting behavior among all subjects; however, we do find some evidence that trust and trustworthiness are influenced by an individual's relative position in the group. Finally, we confirm previous findings that common survey-based measures of social trust are not associated with actual trusting behavior.